Budget gap narrows to P3.47B in Jan

THE national government reported a budget deficit of P3.474 billion for January, 46 percent narrower from a year earlier as growth in revenue outpaced that of government spending, data released by the Department of Finance (DOF) showed on Thursday.

The figures indicate the government was still underperforming in terms of how much it should spend.

The deficit stood at P6.472 billion in January 2015.

Expenditures amounted to P185.7 billion while revenues reached P182.23 billion, compared with P173.12 billion and P166.65 billion, respectively, in the same period a year earlier.

In primary terms, which exclude interest payments on foreign and domestic debt, the government posted a surplus of P42.12 billion in January, narrower than the year-ago surplus of P44.92 billion.

“We’re starting the last year of this administration on a good note and in great shape. Both revenue and expenditure sides of our finances are sustaining a healthy amount of growth,” Finance Secretary Cesar Purisima said.

“We remain in a firm position to finance the commitments in our social contract with the Filipino people. As always, fiscal sustainability is top of mind,” he added.

Revenues

The Finance department noted that January revenues were 9 percent higher at P182.23 billion in January from P166.65 billion a year earlier.

The Bureau of Internal Revenue (BIR) collected P129.65 billion, 7 percent higher than the P121.13 billion posted in January 2015.

The Bureau of Customs, meanwhile, collected P31.08 billion, up 6 percent from last year’s P29.38 billion.

The Bureau of the Treasury contributed P7.93 billion, while other offices collected P13.56 billion, up 88 percent.

Disbursements

National government disbursements expanded by 7 percent in January to P185.7 billion from P173.12 billion a year earlier.

“The lower deficit in January 2016 is possibly still an indication of underperformance relative to the program,” ING Bank senior economist Joey Cuyegkeng said.

Although the Development Budget and Coordinating Committee did not provide a figure for its monthly deficit target, Cuyegkeng said the government has not spent as much as it should have.

Cuyegkeng noted that while government spending is higher than revenues in terms of value, comparison of their year-on-year growth rates suggested otherwise.

“Revenue growth was faster than overall spending growth,” he said, noting that expenditures only grew 7 percent in January, slower than the 9 percent expansion in revenues.

“Further improvement in the execution of the fiscal program could bring overall GDP [gross domestic product]growth closer to the government targets,” the economist said.

Cuyegkeng pointed out that spending growth is crucial to spurring economic activity, and said sustained disbursement growth during the rest of the first quarter and in the second quarter raises the chances of GDP growing 6 percent or better in the first half of 2016.

“Election spending, domestic investment and consumption spending would contribute to stronger growth in 2016,” he added.

Govt optimism

Despite the indications that government spending is still lagging, officials opted to look at the brighter side, expressing optimism that spending would continue to expand for the rest of the year.

“We are pleased to hear of the 7-percent growth in expenditures in January 2016, even as interest payments went down,” said Budget and Management Secretary Florencio Abad.

“The fact that we kicked off this year’s expenditure plan on a positive note can only make us optimistic that 2016 will be a good year for public spending–especially considering the PFM [public financial management]reforms we’ve initiated since 2010 have had more time to take root in the bureaucracy,” he said.